Regina’s downtown office sector continues to suffer from the hangover of a struggling economy as vacancy rose by more than half of 1 per cent during the last six months of 2018.
According to a new report from Colliers International, there was negative absorption of 22,495 square feet from July to December, pushing the vacancy rate up from 10.72 per cent to 11.36 per cent.
“Limited demand means the Regina office market remains a tenant market with ample opportunity for relocation and thorough negotiation,” the report said.
“Through 2019, landlords will continue to compete for new tenants and renewals and therefore renewal rates will likely see downward pressure in the short to medium term.”
Vacancy in Class A space remains low (3.44 per cent) while Class B is at the opposite end of the spectrum at 17.9 per cent. Vacancy in Class C space is at a heady 12.86 per cent.
Total vacancy increased to about 465,000 square feet over the last half of 2018, but Colliers doesn’t believe any negative shakeups are on the horizon.
“The general trends of space reduction and a stagnant economy make it unlikely Regina will see any large-scale growth in the office market,” the report stated.
As a result, it’s expected that rental rates on Class A properties will remain flat while rates for Class B and C space will likely fall as tenants increasingly explore their options.
There are two wild cards, however, which could impact the office market in the not-too-distant future – new construction in Wascana park and on City of Regina land allowing large-scale office use in industrial zones for the first time.